# What's wrong with the stimulus **URL:** \ **Category:** Great Debates\ **Created:** [February 12, 2009, 1:43am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466 "2009-02-12T01:43:57Z")\ **Posts on this page:** 17\ **Page:** 3
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [February 14, 2009, 6:31am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/41 "2009-02-14T06:31:47Z")
> [@Sam\_Stone](#): > > This is a _terrible_ deal, for exactly the reasons you mentioned. Think it through: If the economy is on the rebound in three years, the ‘stimulus’ will turn into a drag and slow it down. If it’s not on the rebound, you’re going to be in a situation where for a long time, this ‘stimulus’ will make it harder to recover. As I said the drag will happen over a number of years in which the economy will probably be growing. And the flip side is that you would get a big GDP boost in the next three years when the economy is in the dump and a boost is most needed. What’s wrong with that? Why not reduce growth by ,say,0.75% from 2012 to 2019 while giving it a big boost of 2-3% in 2009 and 2010 and a smaller boost in 2011. Especially when the growth boost will put unemployed people to work and help poor people in general whereas the growth reduction will just mean a slightly lower average income spread across the whole population and probably disproportionately affecting the wealthy. > [@](#): > > Oh, come on. First of all, using this argument is a form of ad-hominem. Satan himself can oppose the stimulus, and all that matters is whether his arguments hold up. Second, Bush raised the deficit by 3 trillion dollars over 8 years, and throughout that whole period the left was screaming that it was fiscally irresponsible, and that they were actually the party of fiscal responsibility. Many of us on the right were also screaming about it. I was bitching about the Bush Administration’s spending sprees starting from his first year as President. Now Obama is about to bring in deficits of over a trillion dollars a year, and as high as two trillion dollars a year - a burn rate three to five times faster than Bush managed. > . ``` It's not an ad hominem because I am not using that as an argument for the stimulus of which I have given many in different threads. I am just pointing out that many of those crying out for fiscal prudence today at the worst possible time themselves supported policies which created bigger deficits than this stimulus. ``` And please let’s not pretend that it was Bush’s “spending spree” which created the deficits. Over his two terms domestic discretionary spending was far from extraordinary perhaps a third of a point of GDP more per year than when he came in. Then you had the prescription drug bill which in some form was strongly supported by both parties and the public and which was always going to be passed. The bulk of the deficits were created by the tax cuts and things were obviously not helped by the Iraq war. And again it’s important to note the circumstances. Bush’s deficits didn’t make any sense because he wasn’t facing a recession of the magnitude that Obama is. Even if you believe in balanced budgets across the cycle it makes sense to increase deficit spending during a recession particularly as severe as this one. Then when the economy starts growing you reduce the deficit and move to surplus like under Clinton. What doesn’t make sense is to create big deficits when the economy is growing which will add to the debt and drag growth in the future. And regarding the Depression I put up numbers on the other thread which showed that deficit spending did indeed have a positive effect. Basically in Roosevelt’s first term you had fairly big deficits and a huge recovery with near double digit growth rates. Then he was persuaded to balance the budget in 37-38 which helped trigger a recession. Afterwards deficit spending was resumed and the economy started growing again and of course the depression was ended by the gigantic deficit spending of WW2. Japan is a different story but hardly strong evidence that deficit spending is useless. The basic problem there was that you didn’t have co-ordination between fiscal policy, monetary policy and banking policy. In this kind of crisis you need all three with a fiscal stimulus, monetary expansion and rapid action to fix the banking system. That is exactly what you are getting in the US now( and what you had in Roosevelt’s first term)but you never got in Japan where different policies were working in fits and starts and at odds with each other. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [February 14, 2009, 6:41am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/42 "2009-02-14T06:41:45Z")
> [@Hellestal](#): > > And I see Sam Stone doesn’t acknowledge it, either (although it’s been pointed out to him at least two times before). That’s just unacceptable. It’s okay to be leery of spending, but at the very least, you have to engage the arguments that are actually being offered, and that means acknowledging the different nature of a deflating economy. Then you haven’t been paying attention to what I’m saying. I’m not denying that this recession is different, and of course I understand the logic of the Keynesian multiplier at a time when many resources sit unused. The problems the Keynesians won’t address, or even have a discussion on, is whether or not the government is capable of administering this stimulus with any kind of economic efficiency at all. They treat all ‘infrastructure’ as the same. They ignore the difficulties of finding unused resources when the money is directed at very specific things. And yes, I understand the ‘helicopter money’ argument. It’s just incomplete. For example, a study of stimulative spending during WWII when the war ramped up found that the fiscal multiplier in that case was only 0.8, which means it took more than a dollar to create a dollar of output. This is likely because the stimulus was being directed into a specific set of industries which had to compete for the resources they needed against the private market. Products like aluminum, steel, and rubber saw their prices skyrocket and their use to be rationed. This bill has the same problem. 8 billion dollars for high speed rail? Not a lot of unemployment in the old high speed rail business. And guess what? The biggest players are not American companies. Have a look at this [list of the companies involved in making high-speed rail equipment](http://www.railserve.com/Rolling_Stock/Transit_Equipment). So unless you’re going to invoke trade tariffs, a lot of that stimulus money is going to Ruf, or Rotem, or Siemens. None of these effects are even being considered. Helicopter money isn’t even a stimulus if it floats back to the people who lent the money that was dropped. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [February 14, 2009, 6:46am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/43 "2009-02-14T06:46:16Z")
**Hellestal** , Do you know a good source which examines the CBO projections particularly their assumptions for calculating the growth reduction till 2019? The reduction does seem a bit on the high side for a 800 billion stimulus. And yes it is frustrating to have to repeat the same arguments again and again, particularly something as obvious as the notion that the appropriate policy changes when circumstances change. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [February 14, 2009, 7:10am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/44 "2009-02-14T07:10:32Z")
> [@](#): > > For example, a study of stimulative spending during WWII when the war ramped up found that the fiscal multiplier in that case was only 0.8, which means it took more than a dollar to create a dollar of output. This wasn’t a study, it was a WSJ op-ed piece by Barro and it’s a pretty silly methodology of comparing the increase in defense spending with the increase in GDP. Matthew Yglesias offers a pretty decisive rebuttal [here](http://yglesias.thinkprogress.org/archives/2009/01/multipliers_and_diminishing_returns.php). Oh and I have addressed most of the other points in detail in a previous thread. You may not agree with the arguments but please don’t go around saying that these effects aren’t being considered. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [February 14, 2009, 7:42am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/45 "2009-02-14T07:42:15Z")
> [@Sam\_Stone](#): > > Then you haven’t been paying attention to what I’m saying. Oh? > [@Sam Stone](#): > > Second, Bush raised the deficit by 3 trillion dollars over 8 years, and throughout that whole period the left was screaming that it was fiscally irresponsible, and that they were actually the party of fiscal responsibility. Many of us on the right were also screaming about it. I was bitching about the Bush Administration’s spending sprees starting from his first year as President. Now Obama is about to bring in deficits of over a trillion dollars a year, and as high as two trillion dollars a year - a burn rate three to five times faster than Bush managed. You’re _supposed_ to have a higher burn rate in a recession. That’s the point. The comparison is at best misleading without making that note. And it’s hardly the only distortion here. > [@Sam\_Stone](#): > > This is exactly what happened both during the New Deal and in Japan - the stimulus didn’t do much, and ran up the deficit. When the economy finally did start to recover, it happened just as the government was forced to raise taxes to pay for the stimulus, which killed the recovery in its tracks. There are no good words for how wrong this is. The New Deal deficit spending was like mouse droppings compared to the elephant of later war spending. There was no need at all to cut the spending and increase taxes. It was the misguided conservatives of the day who pushed for that, and FDR’s concession pushed the economy down again when that didn’t have to happen. In the end, the US managed to support a whole mountain of debt escaping from the Depression, and yet that debt did not crush economic growth after the war. The Japan example, too, is much more complicated than you make out. It could be, and has been, argued both ways. > [@Sam\_Stone](#): > > And that projection was before the current meltdown, with its subsequent reduction in Medicare witholdings. So the situation just got worse. Much worse. Medicare costs are going to start busting the budget badly within five years - just as the the ‘Stimulus’ also becomes a large net drag on the economy. The stimulus becomes only a _slight_ net drag on the economy. That is, if we’re using the CBO and not figures that a magical unicorn gave you. And that’s also assuming that we don’t get caught in a deflationary trap, which can’t be modeled for so easily. The trend right now is deflation, if we haven’t sunk into it already. > [@Lantern](#): > > **Hellestal** , > Do you know a good source which examines the CBO projections particularly their assumptions for calculating the growth reduction till 2019? The reduction does seem a bit on the high side for a 800 billion stimulus. No, nothing beyond my own investigation of their figures, which hasn’t gone too terribly deep. I’ll keep an eye out, though. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [February 14, 2009, 7:57am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/46 "2009-02-14T07:57:02Z")
I find it amazing that mst senators have signed off on something that that most of them have not even read. The fact is, this s just a huge porkbarrel. How does $150 million for Philipino vets of WWII stimulate the US economy? Or $350 million for “green” golf carts. Oh, I forgot, debt doesn’t matter, so who cares? Maybe if the government cut taxes, things would pick up…but then, who would be paying of Obama’s handlers? ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [February 14, 2009, 9:16am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/47 "2009-02-14T09:16:05Z")
> [@ralph124c](#): > > Maybe if the government cut taxes, things would pick up Pssst: the government **is** cutting taxes. The current $800 billion stimulus bill includes about $280 billion in tax cuts. ---
**Author:** ![Cyberhwk](https://avatars.discourse-cdn.com/v4/letter/c/7993a0/32.png) [@Cyberhwk](https://boards.straightdope.com/u/Cyberhwk)\ **Post date:** [February 14, 2009, 10:26am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/48 "2009-02-14T10:26:57Z")
> [@ralph124c](#): > > I find it amazing that mst senators have signed off on something that that most of them have not even read. I find it amazing you honestly think this is out of the ordinary. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 14, 2009, 2:34pm UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/49 "2009-02-14T14:34:27Z")
> [@Sam\_Stone](#): > > Here’s what else is wrong with the stimulus bill: [No one voting on it will have a chance to read it.](http://cnsnews.com/public/content/article.aspx?RsrcID=43478) That’s because the compromise bill was put together behind closed doors by a small committee (containing no members of the minority party), then rammed down the throats of everyone else. The House voted on it today, after having a grand total of about 8 hours to read the 1000+ page bill. Obviously, they hadn’t read it when they voted on it. > > This is a fundamental abdication of their responsibility to their constituents - the least you can ask of your public officials is that they actually know what they are voting for. > > On the other hand, lobbyists had the bill yesterday, so they could give their ‘input’ to the committee. > > And what does Obama think about this? > > Oh, sorry. That was the hopey-changey Obama speaking. This one doesn’t give a shit. The politicians are busy people. They rarely read bills. They do not have time. They have a staff that does though. They are alerted to anything that might be good or bad. Where do you think a pol gets time in a day to read an 1100 page bill. This bill did not pop into existence yesterday. It has been around for a while with a vote in the house a couple days ago and a run through last week. In some ways it will be business as usual. Like so many Bushie bills ,this one was in a hurry. But the attitude of the admin can not be judged in a week. Give it a chance before you go all little kid on it. ---
**Author:** ![Ocean\_Annie](https://avatars.discourse-cdn.com/v4/letter/o/8797f3/32.png) [@Ocean\_Annie](https://boards.straightdope.com/u/Ocean_Annie)\ **Post date:** [February 14, 2009, 8:06pm UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/50 "2009-02-14T20:06:21Z")
> [@ralph124c](#): > > How does $150 million for Philipino vets of WWII stimulate the US economy? Or $350 million for “green” golf carts. The $350 million is a government loan. It seems critics of the bill referred to the electric car as a glorified golf cart. If the vets spend the money, it will stimulate the economy. I can understand the argument against including the money in the stimulus, but it isn’t wasteful spending. > [@](#): > > Tesla will get $350 million from Uncle Sam: Electric-car maker Tesla Motors said today it was told by the U.S. Department of Energy that its application for $350 million in government loans should be disbursed in the next four to five months. The San Carlos-based company said the funds will go toward building the factory that will ultimately produce its Model S four-door sedan, which will go on sale in 2011. [Biz break: $789B stimulus deal reached – The Mercury News](http://www.mercurynews.com/columns/ci_11681196) ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [February 15, 2009, 4:12am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/51 "2009-02-15T04:12:56Z")
> [@gonzomax](#): > > The politicians are busy people. They rarely read bills. They do not have time. Let’s not make too many excuses here. There was justification for passing _this particular bill_ as quickly as possible. A stimulus should’ve been passed months ago. But the way that Congress normally operates is shameful. We’re early in the season and we had an abnormal piece of legislation, but if this sort of obscure deal making continues, then the Democrats will deserve our condemnation for it, just as the [truly loathsome Republican Congress](http://www.rollingstone.com/politics/story/12055360/cover_story_time_to_go_inside_the_worst_congress_ever/print)\* deserved every bit of of invective hurled at it. To be clear, I’m not saying we should listen to frothy-mouthed conservative complaints. Many of them are caught again in meaningless partisan histrionics because bullshit political theater is the only thing they know. The House tried to compromise with the Republicans and watered down the bill some, and in return for that attempt to work together, they received exactly zero votes. It was slightly better in the Senate, with Snowe and Collins joining in. And of course, it’s not true that the Republicans were excluded completely. Those two Republican Senators who voted for the bill were consulted in the late conference to get the final version to pass both houses. Funny enough, both of these Senators’ wikipedia pages have already been tagged with “RINO” vandalism. \*Link from [Balloon Juice](http://www.balloon-juice.com/?p=17085), although I do recall reading that article when it first appeared. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [February 15, 2009, 8:14am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/52 "2009-02-15T08:14:29Z")
> [@Hellestal](#): > > The New Deal deficit spending was like mouse droppings compared to the elephant of later war spending. There was no need at all to cut the spending and increase taxes. It was the misguided conservatives of the day who pushed for that, and FDR’s concession pushed the economy down again when that didn’t have to happen. In the end, the US managed to support a whole mountain of debt escaping from the Depression, and yet that debt did not crush economic growth after the war. 1. FDR was pursuing his policies in 1932, 33,34,35,36, 38 and 39, and still the recovery continued to be slow (defined compared to other 20th century downturns or relative to most other developed nations at the time). I think it’s a little dubious to say that it was that one year of 1937 that held everything back. 2. As I’ve already pointed out elsewhere, while the WWII spending clearly was a case of massive government spending creating economic growth, it was _temporary spending_. This is one of the essential elements of stimulus I suggested in the OP. Within a year or two of the end of the war, the government had shrunk by more than half, and did not get that big again until the 1960s. This bill is promising nothing of the kind. If what was being proposed was some sort of 3-4 year massive infrastructure-building push, after which 90% of the workers would be laid off and sent back to the private sector, then the comparison would be a lot more apt. Moreover, there are other factors that make WWII a problematic comparison: [ul] [li]Post-WWII, there were significantly more women in the workforce than the start of the depression, or even before WWII. This is not a phenomenon that can be reproduced.[/li] [li]Owing in part to technology created by the war, many industries became more productive and others were greatly expanded. We became much more urban and much more industrial. This is a phenomenon that is unlikely to be reproduced. There’s a load of money for green technology research, but if the new research does finally pay off, those don’t necessarily result in job creation, just job-shifting as dirty tech is phased out. There certainly don’t seem to be any to benefit the way that, say, avaiation and automotive did from WWII. [/li] [li]This is a guess that may be off base, but I suspect that the war bonds people were buying during WWII had lower interest rates than the ones being issued now, meaning borrowing cost less for FDR than it will for Obama. [/li] [li]Finally, I think it’s safe to assume that there are some all sorts of psychological differences between the 40s and today. Post WWII, you had a general euphoria, plus all sorts of pent-up consumer demand. During the war you have to think that people were working longer and harder due to the fact we were in a shooting war; possibly an existential one. That may be hard to quantify, but I strongly suspect it’s real. Obama is an inspirational leader, but I doubt as “inspirational” as Hitler and Tojo.[/li][/ul] You get the point. There are boatloads of differences between a nation at war and a nation suffering a recession. > [@](#): > > The Japan example, too, is much more complicated than you make out. It could be, and has been, argued both ways. Please do so. If we’re making comparisons to USA 2008, Japan in the 1990s seems at least as fitting as USA 1932-1945. > [@](#): > > So, yes, it’s fair to compare Dubya’s irresponsibility with spending so much with Obama’s good sense with spending so much. No, actually it’s not, because it’s **off the point.** I already said, in the OP, that I didn’t like Bush’s spending. Sam has also said that he was unhappy with Bush’s spending. AFAICT, nobody in this thread has said anything different. So to bring Bush into is to introduce an irrelevancy into a debate about what should be done here and now. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [February 15, 2009, 8:29am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/53 "2009-02-15T08:29:39Z")
> [@](#): > > FDR was pursuing his policies in 1932, 33,34,35,36, 38 and 39, and still the recovery continued to be slow (defined compared to other 20th century downturns or relative to most other developed nations at the time). I think it’s a little dubious to say that it was that one year of 1937 that held everything back. ``` You should omit 38 as well as 37. Basically Roosevelt cut back sharply on deficit spending in 37 and went further in 38 and ran almost a balanced budget that year. And there was a sharp recession in 37-38. He went back to deficit spending in 39 and the economy grew sharply again. Coincidence? I think not. ``` ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [February 15, 2009, 8:57am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/54 "2009-02-15T08:57:58Z")
Regarding Japan, Adam Posen may be the leading US expert on Japanese economic policy in the 90’s. He has written a book about it and this is a [paper](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=310106)on the question of the effectiveness of fiscal policy. Here is the abstract: > [@](#): > > The effectiveness of fiscal policy in Japan over the past decade has been a matter of great controversy. We investigate the effectiveness of Japanese fiscal policy over the 1976-1999 period using a structural VAR analysis of real GDP, tax revenues, and public expenditures. We find that expansionary fiscal policy, whether in the form of tax cuts or of public works spending, had significant stimulative effects. Using a new method of computing policy multipliers from structural VARs, we calculate that the multiplier on tax cuts is about 25% higher at a four-year horizon than that on public works spending, though both are well in excess of one. A historical decomposition reveals that Japanese fiscal policy was contractionary over much of the 1990s, and a significant proportion of the variation in growth can be attributed to fiscal policy shocks; accordingly, most of the run-up in public debt is attributable to declining tax revenues due to the recession. Examining savings behavior directly, we find limited evidence of Ricardian effects, insufficient to offset the short-term effects of discretionary fiscal policy. Interesting that they find tax multipliers greater than spending multipliers though if you look inside the paper there is a Japanese model which finds the opposite. Still the paper offers decent support for fiscal stimulus. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [February 15, 2009, 9:13am UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/55 "2009-02-15T09:13:58Z")
While we are on Posen here is a nice [interview](http://www.iie.com/publications/papers/pp20081222posen.pdf)from December which talks about fiscal stimulus (pdf file). It would nice to hear in detail what he thinks about the current bill. > [@](#): > > I’m on record, and I’ll be on record here in saying yes, I think it can > really work. The historical record is that when fiscal policy has been > tried on a large scale and well designed it does work. In the 30s, there > was a lot of stuff done by the New Deal that wasn’t well designed > from a multiplier perspective or, in fact, was offset by tax increases, > because people worried about a balanced budget. > The same thing happened with Japan in the 1990s where people think > they wasted a lot of money. They did waste a lot of money. But the > reason it didn’t stimulate the economy was, as research I’ve done > shows, they either didn’t spend anywhere near as much as they said > they were going to spend or they raised taxes at the same time they > were increasing spending. So out of net, it wasn’t much. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [February 15, 2009, 3:36pm UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/56 "2009-02-15T15:36:57Z")
Economics is not a science, it is a study. It can’t arrive at the certitude of science because experiment is impossible. The closest you can come to is an educated consensus, a rough and general agreement on a principle. In our time, Keynsian economics has become just such a rough consensus: widely, but not universally, accepted. Such is the nature of The Beast. There is no possibility, none, that you can _prove_ that FDR’s economic policy “worked”. This is further complicated by the Tinkerbelle Effect: if we don’t believe, if we don’t clap, Tinkerbelle dies. If Obama spends 10 trillion dollars to stimulate the economy, and people remain pessimistic and worried, they will not spend. And it will not work. Tinkerbelle dies. Perversely conversely, if he were to spend .5 trillion, but the people largely felt that Something Was Being Done, and permitted their collective spincters to unclench, they spend, Tinkerbelle lives. This is most of why I support spending our asses off, throw money at ourselves much like we threw money at Iraq, and spend it on infrastructure projects that people can _see_. That, and the fairly obvious truth that people cannot spend money they haven’t got, and are less likely to spend if they are dreading that phone call from their brother-in-law asking to borrow money. Is it a gamble? Of course! But even betting against the odds makes sense if the payoff is big enough. GeeDubya bet a trllion dolllars to win us a big cauldron of boiling sewage. Obama wants us to bet a trillion dollars to save our asses. (Side note and recommendation: Saw CNBC’s show _House of Cards_ last night, and it is the best examination of how the Perfect Shitstorm came to be. Nailed it. Joe Bob **'luc** says “Check it out!”) ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 15, 2009, 5:02pm UTC](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466/57 "2009-02-15T17:02:59Z")
> [@elucidator](#): > > Economics is not a science, it is a study. It can’t arrive at the certitude of science because experiment is impossible. The closest you can come to is an educated consensus, a rough and general agreement on a principle. In our time, Keynsian economics has become just such a rough consensus: widely, but not universally, accepted. > > Such is the nature of The Beast. There is no possibility, none, that you can _prove_ that FDR’s economic policy “worked”. > > This is further complicated by the Tinkerbelle Effect: if we don’t believe, if we don’t clap, Tinkerbelle dies. If Obama spends 10 trillion dollars to stimulate the economy, and people remain pessimistic and worried, they will not spend. And it will not work. Tinkerbelle dies. Perversely conversely, if he were to spend .5 trillion, but the people largely felt that Something Was Being Done, and permitted their collective spincters to unclench, they spend, Tinkerbelle lives. > > This is most of why I support spending our asses off, throw money at ourselves much like we threw money at Iraq, and spend it on infrastructure projects that people can _see_. That, and the fairly obvious truth that people cannot spend money they haven’t got, and are less likely to spend if they are dreading that phone call from their brother-in-law asking to borrow money. > > Is it a gamble? Of course! But even betting against the odds makes sense if the payoff is big enough. GeeDubya bet a trllion dolllars to win us a big cauldron of boiling sewage. Obama wants us to bet a trillion dollars to save our asses. > > (Side note and recommendation: Saw CNBC’s show _House of Cards_ last night, and it is the best examination of how the Perfect Shitstorm came to be. Nailed it. Joe Bob **'luc** says “Check it out!”) I saw it. Many dopers will be upset because it does not lay the home crisis at the feet of the people who bought homes with no money down or on Fannie and Freddy. [Previous page](https://boards.straightdope.com/t/whats-wrong-with-the-stimulus/485466.md?page=2)